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Which of the following is true regarding the importance of comparative and absolute advantage to making efficient production and trade decisions?

A

Decisions about what to produce and trade should be based on absolute advantage.

B

Decisions about what to produce and trade should be based on comparative advantage.

C

Production decisions should be made based on comparative advantage while trade decisions should be based on absolute advantage.

D

Decisions about what to produce and trade should be based on both comparative and absolute advantage.

E

Neither comparative nor absolute advantage is relevant when making production and trade decisions.

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